Dutch insurance giant ING Group reported a sharp increase in provisions in the second quarter of 2012 on expected losses on its property loan portfolio, in particular in the Netherlands. The provisions for its commercial and private lending business rose to EUR 120 mln from a level of between EUR 40-48 mln in the previous four quarters.
Dutch insurance giant ING Group reported a sharp increase in provisions in the second quarter of 2012 on expected losses on its property loan portfolio, in particular in the Netherlands. The provisions for its commercial and private lending business rose to EUR 120 mln from a level of between EUR 40-48 mln in the previous four quarters.
On Wednesday, ING reported net profit fell 22% in the second quarter to EUR 1.17 bn from EUR 1.5 bn in the year-earlier period. The bank expects provisions for its property loan portfolio will remain high given uncertainties in the market for European retail property and will selectively downsize the portfolio. The percentage of real estate loans in arrears rose to 7.3% of the EUR 31.7 bn portfolio. In the previous two quarters, the figure was around 6%.
Conditions in the property lending market deteriorated in particular in the Netherlands, the UK and Australia. These three countries account for 51%, 4% and 5% of the portfolio. The percentage of loans in arrears remained high in Spain, at 18%.
The number of loans in arrears in the far bigger Dutch private mortgage portfolio was stable at 1.2%. The insurer has allocated EUR 3 mln in provisions against the portfolio due to falling house prices.
